Taxes in the U.S. are too low -- especially taxes on corporations and those who make more than $1 mil per year in income. This is proven by the fact that during 2006 when GDP grew a healthy 3.4%, Washington ran a deficit of $248 billion -- and that doesn't include the cost of the Iraq war, which is conveniently left off budget. If you can't balance the budget during a period of economic expansion, then taxes are too low or spending is too high or both. However, the fact that corporations are stuffed with cash means that the budget problem is probably a revenue problem. During the Clinton years, the government ran a surplus. The dollar was strong. A Euro cost $0.83. Today it takes $1.33. When the budget is balanced or in surplus, the markets love it - they have confidence in the dollar and that Washington has its books in order. A budget surplus is bullish. An increase in income tax rates back to the Clintonian top rate of 38% plus elimination of corporate tax loopholes would bolster the dollar and decrease the price of oil. The short-term pain of increased taxes would be offset by long term economic growth and a stronger dollar.
The "surplus" during Clinton's administration was based on pure hocus-pocus accounting ..kinda how the BLS figures nonfarm payrolls. http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2007/GCBF+5-2007.htm watch for a sharp countertrend rally in bonds. These boys ran the stops and will slam it the otherway now.
Before we do anything with taxes, we need to quite spending so much f*cking money. Money that we don't even have. Every other week or so, Bush promises another $15 billion in aid to Africa to fight Aids. Are you kidding me? We are borrowing money in order to give it to other countries? Iraq is a misquided venture that will certainly fail because the US people are not in favor of it. There is a lot of money being wasted there, but the government is wasting money everywhere you look, not just on this war.
Of all of the things that I've ever heard about taxes in the U.S., being too low has never been one of them. We waste billions of dollars on crap, raising taxes is the last thing they should do.
Raising taxes on the wealthiest people and companies only forces them to move their companies and/or their money elsewhere. When they move their companies/money elsewhere people lose jobs. Which creates another side effect that overall tax collection actually goes down, not up.
Not to say that more can't be done to cut government spending and waste. But then every Congressman says: "Not in my district."
There are 2 problems... 1. What we tax We tax work. That is sheer idiocy. Its a good way to make sure we have a society that ca't afford to produce what it consumes. We need to tax consumption, epecially consumption of imports, not work and jobs. 2. What we spend Limit government spending to 10% of GDP. The problem isn't taxes being too low, its the ubelievable level of spending.